$20bn in home loans refinanced in June: ABS

According to recent data released by the Australian Bureau of Statistics (ABS), the value of total housing loan refinancing between lenders fell by 3.1 per cent in June 2023, amounting to $20.2 billion, compared with $21 billion in May.

Despite this decline, the figure still marked a substantial 12.6 per cent increase compared to the same period the previous year.

This surge in refinancing activity has been driven by borrowers seeking to switch lenders amid interest rate rises, which have seen a 400-bp increase over the past year.

Both owner-occupied and investor housing experienced declines in refinancing during June.

Owner-occupier housing fell by 2.4 per cent to $13.7 billion, following an 8.6 per cent increase the previous month, while investor refinancing also dropped by 4.5 per cent to $6.4 billion, down from $6.8 billion.

Despite the slowdown in refinance activity, ABS head of finance statistics Mish Tan highlighted that refinance activity has remained at “record highs in recent months.”

The data showed that a total of 30,253 owner-occupier loans were refinanced in June, indicating that activity remains well above historical levels.

PropTrack’s economist Angus Moore expects that refinancing activity will continue to remain strong throughout the rest of 2023 as borrowers continue to roll off fixed rates.

While the cash rate has held steady for the month of August, at 4.1 per cent, the overall increase in interest rates has resulted in a surge in refinance activity as mortgage stress begins to rise.

In addition, the impact of rising interest rates has seen new lending activity decline in June, following the sizeable increase in May.

New home loan commitments experienced a decline of 1 per cent in June, following a significant 4.8 per cent lift in May, amounting to $24.6 billion.

Owner-occupied loans fell by 2.8 per cent to $15.9 billion, while investor loan commitments increased by 2.6 per cent to $8.7 billion.

Mr Moore noted there has been a shift in lending trends towards investors, with the share of lending going to investors reaching 35.3 per cent in June, up from 34.1 per cent in May.

“That’s well up from the record low we saw during the pandemic when investors made up less than a quarter of housing lending,” Mr Moore said.

This indicates that investors are making up a larger portion of new housing lending.

The surge in interest rates has also led to a noteworthy increase in fixed-rate loan commitments, rising by 70.8 per cent in June, reaching a total value of $4.5 billion.

However, this remains below the $26 billion recorded in June 2021 when interest rates were at record lows.

In contrast, the value of new variable-rate loan commitments fell by 1.7 per cent.

Interestingly, more first home buyers (FHBs) chose to fix their rates in June, with a notable increase of 35.8 per cent.

Meanwhile, new variable loan commitments for FHBs fell by 2.1 per cent, with the number of new loan commitments dropping 0.8 per cent over the month to June overall.

[Related: Owner occupier refinancing sets new record]